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September

The European Commission has formally adopted a regulation endorsing IFRS and related interpretations, as Recommended by the Commission's Accounting Regulatory Committee in July.

The endorsement confirms that IFRS must be followed under the terms of the general IAS Regulation adopted by the European Parliament and the Council in 2002. The Commission's endorsement covers all existing IASB standards and interpretations except for IAS 32 and IAS 39 and related SICs 5, 16, and 17. IAS 32 and 39, which deal with the accounting and disclosure of financial instruments, are not included because they are currently being revised by the IASB. The EC has also announced that the endorsed IFRS will shortly be published in the official EU languages in the Official Journal of the EU. In total, there are at present 34 existing IASs (including IAS 32 and IAS 39) and 31 existing interpretations (including SICs 5, 16, and 17), which cover about 1,500 pages. Click for EC Press Release (PDF 69k).

In a Speech before the Foreign Policy Association in New York, SEC Chairman William H.

Donaldson made the following comments about the convergence of IFRS and US GAAP:

We are also working hard to accelerate progress on a number of other important international issues. One such issue is the convergence of international accounting standards and the Generally Accepted Accounting Principles used in the United States. While sounding arcane, this issue has major implications for cross-border business. If the difficult issues involved in convergence can be resolved - no easy task for sure - investors and issuers alike will benefit, by increasing comparability and reducing the cost of capital.

Schmid will retire from the Board in March 2004, the IASC Foundation has Announced (PDF 13k). Before joining the IASB, Mr. Schmid served as a Senior Vice President of Nestlé, responsible for corporate reporting, and was involved in preparing Nestlé's financial statements for 40 years. The Trustees of the Foundation have begun a Search (PDF 31k) for another individual with a background in the preparation of financial accounts as Mr. Schmid's successor.

We have posted the 22 September 2003 newsletter (PDF 111k), which contains an update on recent releases issued by the Australian Accounting Standards Board as part of the convergence process with International Financial Reporting Standards.

The Institute of Chartered Accountants in England and Wales has issued the fourth update of its Convergence Handbook, originally published in November 2000. The Handbook compared IFRS and UK GAAP.

This new update, which replaces all previous updates, reflects the effects of standards and exposure drafts issued by the IASC, the IASB, and the UK Accounting Standards Board up to the end of August 2003. Click to download the Convergence Handbook Update (PDF 291k). You can find More Information here.

In a presentation at the IASB's meeting with world standard setters on 22 September 2003, Kevin Stevenson, chairman of the International Financial Reporting Interpretations Committee (IFRIC), announced that IFRIC is likely to issue five draft interpretations in the fourth quarter of 2003. They will deal with:
Rights of Use of Assets
IAS 37, Decommissioning Funds
IAS 19, Pension Plans with Minimum Return Guarantees
IAS 19, Multi-Employer Pension Plans
IAS 11, Construction Contracts
Two Draft Interpretations (D1 on Emission Rights and D2 on Decommissioning) are currently outstanding.

IFRIC will meet at the IASB's offices in London on 30 September and 1 October 2003. See news story of 11 September 2003 for the agenda.

The IASB has approved in principle the proposals that will be included in an exposure draft on how companies in the mining and oil and gas industries should apply existing IFRS.

Exploration costs would be added to the scopes of both IAS 16 and IAS 38 (those Standards currently exclude such costs). However, the exposure draft will propose that both current IFRS appliers and first-time adopters will be allowed to continue their current accounting practices for exploration costs.

The IASB is committed to providing a 'stable platform' for the transition to IFRS in Europe in 2005. 'Stable platform' means issuing, by 31 March 2004, all of the new and revised Standards that will be required for companies adopting IFRS in 2005, with no further changes until after 2005. At its meeting on 22 September 2003 with representatives of the accounting standard setting bodies in 40 countries, the IASB announced the following plans for releasing various Standards currently under development:IASB's Publications Programme for the 2005 "Stable Platform"
Fourth Quarter 2003:
Improvements – 10 revised IAS by 31 October and 2 more revised IAS by 30 November
Amendments to IAS 32 and IAS 39 – by 30 November (without the proposed portfolio hedging amendments)
Extractive Industries Exposure Draft – by 31 October
First Quarter 2004 (all likely in March 2004):
Share-based payment
Business Combinations Phase I – 3 Standards
Insurance Contracts Phase I
Portfolio Hedging Amendments to IAS 39
Asset Disposals and Discontinued Operations
The Board also announced that each of its final Standards and Interpretations will be made available on its Website without charge (not including basis for conclusions and implementation guidance).

The final Standards will be placed on the Board's website in "preliminary form" as soon as the ballots have been received from the 14 IASB members. "Preliminary form" means that there may be some final changes made in the process of preparing the printed versions. If any such changes are made, a revised version will be placed on the IASB's website. The Standards, along with the bases for conclusions and implementation guidance, will be available for purchase in printed form.

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